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TMI Blog1982 (1) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... as been issued as the base for making re-assessment for the other assessment years under appeal. The AAC on page 6 of his impugned order has referred to "account Satish Kapoor" which apparently contradicts what the Income-tax Officer states. As recorded by the ITO in the impugned order for the asst. yr. 1973-74, there were several entries in the name of hosiery manufacturers/dealers. The total of the entries at pages 82 and 83 was Rs. 1,30,915.61. There were also entries at page 94 of the note book and the total thereof was Rs. 25,487. It is a finding of fact given by the ITO that, "it is seen that there are no dates appearing in this account in respect of any of the entries." The ITO also noticed that against certain entries in this account, the word 'cheque" was written and whereas the word 'cash' appeared against certain other entries. The entries were written in the hand of Shri Narinder Nath Bahl. The ITO proceeded to make enquiries in this regard. 3. At the time the ITO was proceeding on the above Lines, the assessments for the assessment years under appeal stood finalised as appearing in the tabulated date below: S. No. Asstt. year Date of Original Section Income ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of brokerage income earned in the past years including expected amounts with a view to settle profit sharing ratio. In these details figures of cheques were noted together with expected amounts which were denoted as 'cash'. Q. Did the word 'cash' not actual amount received for brokerage at any time? Ans. No. This was only a symbol to represent figures which everybody wanted to be taken into account on the basis of bits of record and loose papers regarding brokerage deals claimed to have been conducted even though the amounts had not been received as yet. Q. Were these figures mentioned as 'Cash' real or imaginary? Ans. For the purpose of securing greater share in the proposed venture inflated figures could have been introduced." The ITO considered the statement of Shri Bahl as not satisfactory. According to him, "the account itself is essentially of the nature of a secret account. The transactions noted as cheque are verifiable from the assessee's bank pass book and these represent brokerage disclosed by the assessee in different years. Entries noted as 'cash' are, however, not verifiable from any record." He rejected the claim made by the parties that these were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s written and requested that, these parties may be summoned so that the truth of the matter may be ascertained. The ITO, however, for the reasons best known to him, has not mentioned anything about this necessary verification in his impugned orders and this is how the ITO rejected the contentions of the assessee: "Having examined the evidence on record and under the facts and circumstances of the case, it is difficult to accept the assessee's contention as a satisfactory explanation. Every if the case entries did partly represent expected brokerage, the assessee has not been able to furnish full details of the transactions nor he has furnished any corelation of these cash entries with any specific receipts during the subsequent period. As such, it is reasonable to hold that the case entries represent undisclosed brokerage receipts at different times which have not been fully and truly disclosed in the course of original income-tax assessment proceedings. Assessee's plea that ratio of the Supreme Court's decision in the case of Lata Mangeshkar applies in this case and that no adverse inference can be drawn against the assessee merely on the basis of documents seized from somebody ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Mewal Das 1976 CTR (SC) 220 : (1976) 103 ITR 437 (SC); (iii) Ganga Saran & Sons P. Ltd. vs. ITO (1981) 22 CTR (SC) 112 : (1981) 130 ITR (SC); and (iv) Vimal Chandra Golecha & Ors. vs. ITO (1981) 25 CTR (Raj) 175. 11. On merits, the ld. Counsel for the assessee submitted that the entries had been found in the books of account of another party. The account was by way of notings and not entries in the regular books of account. The account had been explained and owned up by three parties. There was no evidence whatsoever to conclude that the entries represented figures of cash mentioned in that account and were income of the assessee much less the income for the assessment year in which it had been added. It was further submitted that the ITO, at the back of the assessee had enquired from the parties against whose names the figures of cash had been shown and since those parties denied, the ITO kept back the information and did not reveal anything either in the assessment or to the assessee. On such facts, it was submitted no additions could be sustained because these were made on mere conjectures and surmises. For these submissions, reliance was placed on the ratio decidendi o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the ITO to reopen the assessments which had been finalised after due enquiry on this account, the reassessments are bad in law and have to be struck down. 17. It is to be noted that even in the case relied on by the Revenue justifying the reopening of the assessments, the Calcutta High Court has clearly pointed out that. "there must be some grounds for the reasonable belief that there has been non-disclosure or omission to file a true or correct return by the assessee resulting in escapement of assessment or in under-assessment Such belief must be held in good faith and should not be a more pretence or change of opinion on inferential facts or facts extraneous irrelevant to the issue and the material on which the belief is based must have a rational connection or live link or relevant bearing on the formation of the belief. "Now the ITO has reopened the assessments and has not shown the reasons to the assessee. Apparently he reopened the assessments as he says because there were entries in a note book seized from the residential premises of Shri N.N. Bahl in a search and seizure operation carried on by the Department on 10th Aug., 1977. The ITO in the impugned orders particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO which would satisfy these conditions for reopening of the assessments. In each assessment order all that the ITO has written is that reassessment proceedings were initiated in this case under s. 147(a). There is no observation about the reasons with the ITO to reopen the assessments. Therefore, the contention raised on behalf of the assessee which have not been contradicted are absolutely justified. 19. Even on merits, the additions made have no legs to stand upon. The issue that really arises is whether on the basis of some entries recorded in a note book seized from the premises of a third party, the onus of proof of those entries can be thrown upon the assessee and the failure upon the part of the assessee to do so lead to the additions of the amounts noted therein. It is clear from what has been stated above that the figures of cash were recorded alongwith figures of cheques and parties concerned gave a reasonable explanation that these were jotted down for determining the profit sharing ratio for a joint venture which the parties were going to start. If the ITO did not believe this version, it was for him to prove that the entries recorded in the note book represented i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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